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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">PS – I only mentioned I do some as a way of referencing the complexity (I have an LLM in Tax) not to drum up business
</span><span style="font-size:12.0pt;font-family:"Segoe UI Emoji",sans-serif">😉</span><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
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<p class="MsoNormal"><i><span style="font-family:"Script MT Bold""><o:p> </o:p></span></i></p>
<p class="MsoNormal"><i><span style="font-family:"Script MT Bold"">Diane J. Kiepe<o:p></o:p></span></i></p>
<p class="MsoNormal">Douglas Eden, P.S.<o:p></o:p></p>
<p class="MsoNormal">717 W. Sprague Ave., Suite 1500<o:p></o:p></p>
<p class="MsoNormal">Spokane, WA 99201<o:p></o:p></p>
<p class="MsoNormal"><a href="mailto:djkiepe@depdslaw.com"><span style="color:#0563C1">djkiepe@depdslaw.com</span></a><o:p></o:p></p>
<p class="MsoNormal">509-455-5300<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif">KINDLY ALLOW 2-4 WORKING DAYS TO RECEIVE A RESPONSE TO NON-URGENT EMAILS. FEEL FREE TO SEND YOUR EMAIL (OR RESEND YOUR EMAIL AS THE CASE MAY BE) MARKED URGENT IN THE SUBJECT LINE.<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt;color:black">DISCLAIMER: the preceding message and any attachments may contain confidential information protected by law, the attorney-client privilege or other privilege. This communication is intended to
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<p class="MsoNormal"><b>From:</b> wsbapt-bounces@lists.wsbarppt.com <wsbapt-bounces@lists.wsbarppt.com>
<b>On Behalf Of </b>Diane J. Kiepe<br>
<b>Sent:</b> Tuesday, August 29, 2023 11:28 AM<br>
<b>To:</b> WSBA Probate & Trust Listserv <wsbapt@lists.wsbarppt.com><br>
<b>Subject:</b> Re: [WSBAPT] Basic Questions re Trust Distributions<o:p></o:p></p>
</div>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">Oh Mark,<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">Trust Taxation is its own animal and I would run, not walk, to take tax matters to a well versed 1041 preparer. I do some but only simple ones. Distributions may or may
not be taxable – there is a tiering system – but for Simple Trusts, income is taxed to the distributee, for Complex Trusts certain distributions are also taxed. By way of example only, interest income distributed to a bene will be taxed as income, a distribution
of corpus will not. Simple Trust get really crazy and there is authority that the income is taxed to bene whether or not distributed. See attached and below – many don’t know this and I would bet some of those include IRS folks. There is also a bit of a
twist for taxable year – something called the 65 day rule – I use it every year. Distributions made in the first 65 days can be deemed to have been distributed on 12/31 of year prior. This really can save a trust with even moderate income given the hypertaxation
of trusts.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">A 1041 is a blend of 1040 and a 1065 in my opinion. Trust is reporting entity and may or may not have a tax liability (depends on trust terms (Simple vs Complex) and of
course distributions made and their source). <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal" style="background:white"><b><span style="font-size:10.5pt;font-family:"Arial",sans-serif;color:#333333">I.R.C. § 652(a)</span></b><a name="(a)"></a><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:black"> <b>Inclusion</b> — <o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:black">Subject to subsection (b), the amount of income for the taxable year required to be distributed currently by a trust described in section 651 shall
be included in the gross income of the beneficiaries to whom the income is required to be distributed, whether distributed or not. If such amount exceeds the distributable net income, there shall be included in the gross income of each beneficiary an amount
which bears the same ratio to distributable net income as the amount of income required to be distributed to such beneficiary bears to the amount of income required to be distributed to all beneficiaries.<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><b><span style="font-size:10.5pt;font-family:"Arial",sans-serif;color:#333333">I.R.C. § 652(b)</span></b><a name="(b)"></a><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:black"> <b>Character
Of Amounts</b> — <o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:black">The amounts specified in subsection (a) shall have the same character in the hands of the beneficiary as in the hands of the trust. For this
purpose, the amounts shall be treated as consisting of the same proportion of each class of items entering into the computation of distributable net income of the trust as the total of each class bears to the total distributable net income of the trust, unless
the terms of the trust specifically allocate different classes of income to different beneficiaries. In the application of the preceding sentence, the items of deduction entering into the computation of distributable net income shall be allocated among the
items of distributable net income in accordance with regulations prescribed by the Secretary.<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><b><span style="font-size:10.5pt;font-family:"Arial",sans-serif;color:#333333">I.R.C. § 652(c)</span></b><a name="(c)"></a><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:black"> <b>Different
Taxable Years</b> — <o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:black">If the taxable year of a beneficiary is different from that of the trust, the amount which the beneficiary is required to include in gross
income in accordance with the provisions of this section shall be based upon the amount of income of the trust for any taxable year or years of the trust ending within or with his taxable year.<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:black">(Aug. 16, 1954, ch. 736, 68A Stat. 219; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1906(b)(13)(A), 90 Stat. 1834.)<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><b><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:black">BACKGROUND NOTES</span></b><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:black"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><b><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:black">AMENDMENTS</span></b><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:black"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><b><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:black">1976</span></b><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:black">--Subsec. (b). Pub. L. 94-455 struck out “or
his delegate" after “Secretary”.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">Hope this helps.<o:p></o:p></span></p>
<div>
<p class="MsoNormal"><i><span style="font-family:"Script MT Bold""><o:p> </o:p></span></i></p>
<p class="MsoNormal"><i><span style="font-family:"Script MT Bold"">Diane J. Kiepe<o:p></o:p></span></i></p>
<p class="MsoNormal">Douglas Eden, P.S.<o:p></o:p></p>
<p class="MsoNormal">717 W. Sprague Ave., Suite 1500<o:p></o:p></p>
<p class="MsoNormal">Spokane, WA 99201<o:p></o:p></p>
<p class="MsoNormal"><a href="mailto:djkiepe@depdslaw.com"><span style="color:#0563C1">djkiepe@depdslaw.com</span></a><o:p></o:p></p>
<p class="MsoNormal">509-455-5300<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif">KINDLY ALLOW 2-4 WORKING DAYS TO RECEIVE A RESPONSE TO NON-URGENT EMAILS. FEEL FREE TO SEND YOUR EMAIL (OR RESEND YOUR EMAIL AS THE CASE MAY BE) MARKED URGENT IN THE SUBJECT LINE.<o:p></o:p></span></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:black">DISCLAIMER: the preceding message and any attachments may contain confidential information protected by law, the attorney-client privilege or other privilege. This communication is intended to
be private and may not be recorded or copied without the consent of the author. If you believe this message has been sent in error, REPLY to sender and then DELETE this message. Thank you. </span><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">
wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Mark Anderson<br>
<b>Sent:</b> Tuesday, August 29, 2023 11:02 AM<br>
<b>To:</b> WSBA Probate & Trust Listserv <<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>><br>
<b>Subject:</b> [WSBAPT] Basic Questions re Trust Distributions<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#002060">Trustee is required to make periodic distributions to a beneficiary. Are the distributions taxable? Is the Trustee required to withhold any amount from this distribution
for federal taxes? <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#002060"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#002060">Thanks.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#002060"><o:p> </o:p></span></p>
<p class="MsoNormal" style="margin-bottom:12.0pt"><b><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#222A35">Mark B. Anderson<br>
</span></b><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#222A35">ANDERSON LAW FIRM PLLC<br>
821 Dock St Ste 209 PMB 4-12<br>
Tacoma, Washington 98402<br>
+1 253-327-1750<br>
+1 253-327-1751 (fax)<br>
</span><a href="mailto:marka@mbaesq.com"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">marka@mbaesq.com</span></a><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#222A35"><br>
</span><a href="http://www.mbaesq.com/"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">www.mbaesq.com</span></a><b><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#222A35"><o:p></o:p></span></b></p>
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